Free Trading Books
Claude
Recently I started working in an algotrading company as a programmer.
After I studied that subject a little in the university and read a book or two in that field I gained a little knowledge in that area.
But apparently very little.
I mean, when I studied it at the beginning from books I learnt about options and futures, bull spread and condors, delta and gamma. And in every book the matterial was a bit same.
When I entered the company, I notices that the whole language is different.The traders trade positions not stocks, they buy volatility not assets. They care about vanna and vomma almost as they do for gamma.
I am looking for a book that bridges this gap. What I dont like is another book that explains options, gamma and yet another simple bull spread. I feel that the books i have read are detached from real life jargon. (Neither would I want a heavy mathematical book)
This book has an interesting property: it explains options at an intuitive level, without any math. Once you have gone through the first few chapters, you get to the point of being able to roughly value options in your head with some simple arithmetic, and intuitively understand the relationships such as "as the underlying spot price increases, will delta increase or decrease for a call?" (try doing that after being hit on the head by the Black Scholes formula).
I've read N. Taleb. Dynamic hedging for exactly the same reason and found it quite helpful. You can find a preview at Google Books to examine the content - the greatest thing about this book that N. Taleb tries to show how things work in pracice not just how to derive another formula (what is a subjsect for other great books on quantitative finance).
I have struggled to find such a book. I got enthusiastic when I first heard about Taleb's Dynamic Hedging, but I found it really disappointing. Doesn't give any market insight into vol trading at all. I just remember something about him saying that digitals are scary to risk manage so you should always price them as a call spread - but we all know that!
I think there is space for just such a book.As an effort to bridge the gap I wrote a post in my blog which explains a lot of the lingo you might hear on a fixed-income trading floor. Understanding the jargon is certainly one important step towards understanding what really happens on the trading floor. (Click here to read)
Market Risk Analysis is the most comprehensive, rigorous and detailed resource available on market risk analysis. Written as a series of four interlinked volumes each title is self-contained, although numerous cross-references to other volumes enable readers to obtain further background knowledge and information about financial applications.
Volume I: Quantitative Methods in Finance covers the essential mathematical and financial background for subsequent volumes. Although many readers will already be familiar with this material, few competing texts contain such a complete and pedagogical exposition of all the basic quantitative concepts required for market risk analysis. There are six comprehensive chapters covering all the calculus, linear algebra, probability and statistics, numerical methods and portfolio mathematics that are necessary for market risk analysis. This is an ideal background text for a Masters course in finance.
Volume II: Practical Financial Econometrics provides a detailed understanding of financial econometrics, with applications to asset pricing and fund management as well as to market risk analysis. It covers equity factor models, including a detailed analysis of the Barra model and tracking error, principal component analysis, volatility and correlation, GARCH, cointegration, copulas, Markov switching, quantile regression, discrete choice models, non-linear regression, forecasting and model evaluation.
Volume III: Pricing, Hedging and Trading Financial Instruments has five very long chapters on the pricing, hedging and trading of bonds and swaps, futures and forwards, options and volatility as well detailed descriptions of mapping portfolios of these financial instruments to their risk factors. There are numerous examples, all coded in interactive Excel spreadsheets, including many pricing formulae for exotic options but excluding the calibration of stochastic volatility models, for which Matlab code is provided. The chapters on options and volatility together constitute 50% of the book, the slightly longer chapter on volatility concentrating on the dynamic properties the two volatility surfaces the implied and the local volatility surfaces that accompany an option pricing model, with particular reference to hedging.
Volume IV: Value at Risk Models builds on the three previous volumes to provide by far the most comprehensive and detailed treatment of market VaR models that is currently available in any textbook. The exposition starts at an elementary level but, as in all the other volumes, the pedagogical approach accompanied by numerous interactive Excel spreadsheets allows readers to experience the application of parametric linear, historical simulation and Monte Carlo VaR models to increasingly complex portfolios. Starting with simple positions, after a few chapters we apply value-at-risk models to interest rate sensitive portfolios, large international securities portfolios, commodity futures, path dependent options and much else. This rigorous treatment includes many new results and applications to regulatory and economic capital allocation, measurement of VaR model risk and stress testing.
In my opinion there is one modern author on the subject of practical options trading who stands head and shoulders above the rest, and that is Euan Sinclair. His most recent book is Volatility Trading, and he has another book out soon.
Sinclair covers actual strategies, along with questions of liquidity and position sizing that I never see in other options books. He writes clearly, and (though I have not evaluated its quality) includes source code.
Though @Giovanni recommends Hull's classic, I find that text to be more of an academic encyclopedia than a practical guide. It is a great book but its scope is too broad to provide the detail you need. These days, I rarely look at Hull because for each subtopic, there is typically a more detailed book or article that serves as a more complete starting point.
One other classic book, that contains a lot of the practical thinking you might want, is Nateberg's Option Volatility and Pricing. It has often been treated as a more intuitive and practical companion to Hull, with good reason.
Actually, reading books will strengthen your theoretical knowledge but the market wants practical knowledge. Even if you earn theoretical knowledge, you have to apply this knowledge on the market through demo account to make it practical.
Titles from each can be useful and maybe the best traders have a balance of knowledge from all of these areas. I would highly recommend certain writers -
be a good trader - Mark Douglas, Edwin Lefvre (Jesse Livermore),
This video series/book will take you on a journey to create a cryptocurrency trading bot in Elixir. You will be able to see first-hand, how complex systems are designed and developed as we will build them together!
As the book grows and people start to add suggestions/errata/dependencies updates, etc. I realized that publishing the book via the Leanpub platform is not best suited to maintain this book long-term for the benefit of the community.
Taking the above under consideration, I decided to make my book publicly available online(as a website - you can still download the PDF and EPUB through it) as well as open-source the markdown files for the book itself
Chapter 18 - Functional Elixir Focused on revising the code to group the business logic into a separate module and refactoring to push side effects to the edge. We then compare pure FP(managing effects) vs pragmatic Elixir features.
Hey everybody! I just finished mastering the trade by John F. Carter and it really opened my eyes on a whole new level of day trading! So I was wondering what books did this to other people. I'll add to the list "trading in the zone by Mark Douglas" that gave me a lot of confidence when trading and turned my trading from negative to flat in my first two months of trading.
Hi Francois ... just finished John F. Carter book, I skiped some chapters because they where not stocks related (mostly options, futures and forex) and with proprietary indicators make difficult to me to put them into practice. The most useful parts to me were on psychology and business plan. Ill take a look again.
Yeah sure! First of all i'll say that the book is a bit overwhelming and it's not aimed at stock traders. The strategies used in this book are mostly for futures and he did a pretty good job explaining in details why he prefers trading them instead of stocks. What is great about this book if you are a stock trader is the way John wants you to think when you're trading. He is always thinking about beating the other traders instead of thinking about his moving averages and what not. The book also features a lot of strategies and technical indicators that were completely new to me. The book is heavy in information but it is very fun to read because you can feel the passion of John F. Carter trough his book. The man is crazy about day trading and is clearly a true master of the markets!
I also vouch for Trading in the Zone by Mark Douglas. It was a wake up call for me. The book completely changed my perspective on the psychology of trading and revealed how little I knew about my own emotions. After reading it, I am less hesitant to enter trades and willing to let go of losses much sooner. It all boils down to training your mind to believe in (with absolute die-hard conviction) the Five Fundamental Truths of Trading and Seven Principles of Consistency:
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